100 Felony Charges Filed Against Alleged Calif. Insurance Fraud Ring


By Bob Graham  Insurance & Financial Advisor

More than 100 felony charges have been filed against suspects allegedly involved in an elaborate, organized fraud ring operating in the San Francisco area that allegedly cost 11 insurance companies up to $500,000 in losses.

Indictments were handed up by a Contra Costa County, Calif., grand jury Sept. 22 in connection with the two-year investigation into the alleged false claims, according to California Insurance Commissioner Dave Jones.

“The sheer magnitude of this case demonstrates the extreme degree of conspiratorial lengths that these suspects colluded to perpetrate,” Jones said in a statement. He added that his office was assisted by investigators from the California Highway Patrol and Contra Costa County District Attorney’s Office, as well as insurance companies and the National Insurance Crime Bureau.

Insurance department fraud investigators opened an investigation in July 2009 into a suspected insurance fraud ring operating in the San Francisco Bay area, focusing on a group of subjects who were submitting suspected fraudulent insurance claims. The suspected fraudulent claims included reported vehicle thefts, theft of personal property from vehicles and residences, traffic collisions, personal injury claims, wage loss claims and vandalism claims, officials aid. The investigation also revealed that the subjects filed police reports and submitted documents to various insurance companies in support of the claims.

Detectives obtained and reviewed thousands of documents, interviewed dozens of witnesses, and served search warrants for records, together with Investigators from the California Highway Patrol and Contra Costa County District Attorney’s Office.

The investigation revealed that the group appeared to be involved in several insurance fraud schemes, targeting Geico, Allstate, State Farm, Balboa, Homesite, Progressive, Farmers, American Bankers, 21st Century, Travelers and Unitrin Insurance Carriers, according to investigators.

One scheme involved the purchase of jewelry, high-end electronics and other merchandise. Investigators suspected that once purchased, the subjects returned the items to the retailer and retained the sales receipt. Members of the group shared the receipts of the returned items and presented them as evidence of property ownership in numerous suspected fraudulent insurance claims. Investigators also believed that in some cases, the receipts were altered and used several times by different subjects in their claims.

The group also allegedly used garment “pull-tags” on un-purchased clothing as evidence of ownership in the insurance claims. At other times, members of the group would first sign declarations stating they owned property allegedly stolen, and/or then submit photographs wearing items allegedly stolen, all in support of claims believed by Investigators to be fraudulent, according to investigators.

Investigators further discovered that members of the group who filed insurance loss claims for alleged traffic collisions, stolen vehicles, and vehicle vandalisms allegedly repeatedly involved the same subjects with the same damage to their vehicles. In some cases, investigators also found that the involved subjects submitted injury and wage loss claims as a result of the alleged collisions. The investigation determined the subjects did not suffer the wage loss as reported in their claims.

The alleged co-conspirators are accused of submitting false declarations that each of them rented their personal vehicles to each other for reimbursement under the insurance policies.

Investigators are attempting to determine the amount of loss to the insurance industry as a result of these alleged fraud schemes. The estimated loss, which contains both real and potential amounts, is believed to be at least $300,000, and may be over $500,000.

Multiple suspects were arrested Oct. 4 in the San Francisco Bay area; one out of state suspect was taken into custody by the United States Marshals Office in New York. This suspect will be extradited to California to face prosecution. At press time, several suspects were in custody in California.

Bail for all of the suspects, who were not immediately identified, was set at a total of more than $18 million, according to Jones’ office.